REPORT FUTURE PROOF BRITAIN IN THE 2020S
Mathew Lawrence December 2016 © IPPR 2016
Institute for Public Policy Research INTRODUCTION Brexit is the firing gun on a decade of disruption. As the UK negotiates its new place in the world, an accelerating wave of economic, social and technological change will reshape the country, in often quite radical ways. In this report, we set out five powerful trends that will drive change in the 2020s. 1. A demographic tipping point: As the population grows, the UK is set to age sharply and become increasingly diverse. Globally, the long expansion of the working-age CONTENTS population is set to slow sharply. 2. An economic world transformed: The economic world order will become more Introduction...... 3 fragile as globalisation evolves, trade patterns shift, and economic power gravitates toward Asia. At the same time, developed economies are likely to struggle to escape Executive summary: The UK in 2030...... 4 conditions of secular stagnation. The institutions governing the global economy are A world transformed: Five major disruptive forces reshaping Britain...... 6 likely to come under intense pressure as the American hegemony that underpinned the postwar international order fades and the Global South rises in economic and Britain at the periphery?...... 8 geopolitical importance. The 2020s: A demographic tipping point for the UK...... 10 3. Brexit – the aftershock: The economic implications of Brexit are likely to put the Stagnation blues? A global low growth decade...... 12 country on a lower growth, lower investment trajectory, worsening the public Brexit: The aftershock...... 14 finances, with important consequences for the UK’s economy and living standards. Migration is likely to become more controlled. At the same time, politics – long Tectonic technological changes: A brave new world...... 16 subservient to a liberalising economic consensus – is likely to become increasingly Binding prometheus: Decarbonisation decade...... 18 assertive in seeking to reshape Brexit Britain.
10 challenges in the 2020s...... 20 4. Technological transformation – between Star Trek and the Matrix: Exponential improvements in new technologies – computing power, machine learning, artificial Weakened economic foundations...... 22 intelligence systems, automation, autonomous vehicles, health and resource A radically reshaped economy...... 24 technologies, and the Internet of Things, among others – are expected to radically transform social and economic life. These changes have the potential to create an Different jobs, different lives...... 26 era of widespread abundance, or a second machine age that radically concentrates Intelligent automation: A future between Star Trek and the Matrix...... 28 economic power. Which path we take – a future between Star Trek and the Matrix – will depend on the type of politics and institutions we build. A state under strain: Public finances in the 2020s...... 30 The future of public services: Under pressure...... 32 5. The shock of the Anthropocene – instability in an age of natural systems decay: Climate change, biodiversity degradation, and resource depletion mean we will Inequality unleashed: Living standards, poverty and wealth...... 34 increasingly run up against the limits of the physical capacity of the Earth’s natural Intergenerational strain...... 36 systems to reproduce life as at present. The natural constraints of the Anthropocene age – our new geological era in which humans are the primary shaper of the Earth’s A new ‘social’-ism?: Data ubiquity and the politics of the network...... 38 ecology and ecosystems – will force us to build a collective, democratic politics A decade of democratic distress...... 40 of restraint. The alternative is systemic degradation in ecosystems and rising inequalities in the years ahead. Conclusion...... 42 Together, these trends are going to reshape how we live and work, reorganise our social, economic and political institutions, and redistribute power and reward in society. References...... 43 In the longer term, as machine learning and computing power divorces intelligence from consciousness, as improving health technologies allow for biological enhancements and species divergence, and as the final frontier is conquered by space travel, technological and social transformation will increasingly change what it means to be human.
This is the world hurtling towards us, with very different futures and modernities becoming possible. Critically, there is immense potential for technological and economic change to be shaped to create a more abundant, democratic and equal society. However, we will have to better understand how our world is changing, and by what forces those changes are driven, if we are to build that future. As David Bowie said, ‘Tomorrow belongs to those who can hear it coming.’
2 3 KEY FACTS ON CHANGE EXECUTIVE SUMMARY: THE UK IN 2030 1 in 3 Greying society: Between 2016 and 2030, the population aged 65+ PART 1: FIVE MAJOR DISRUPTIVE FORCES DRIVING CHANGE IN THE 2020S will grow by 33%, while the 16–64 population will grow by only 3%.
1. A demographic 2. A changing economic 3. Brexit: 4. Tectonic 5. Decarbonisation tipping point world order the aftershock technological shift decade population boom The UK’s population will grow, Economic power will Brexit was a profound shock Accelerating technological The imperatives of avoiding age dramatically, and become accelerate eastward even to the UK’s political and change will cause dramatic systemic climate change The UK will have the fastest growing population of any significantly more diverse, with as global growth rates slow economic order. While its shifts in the way we work, will drive a transformation major European country, and become the largest country in Europe the 2020s a tipping point to a due to demographic and long-term effects remain consume, and communicate. in how we produce and by population in the mid-2040s. radically different population productivity trends. The nature uncertain, it is likely to set the Politics, economics and consume energy by 2030. structure in future decades. of globalisation will evolve UK on a permanently lower power structures will be Transport and cities will also and trade patterns alter. growth and living standards profoundly disrupted, change. Natural systems Urbanisation will accelerate. trajectory, reshape our trading and with it social relations. that reproduce materials relationships, and reduce of life will break down, <50% European immigration. In causing largescale instability. Emerged markets? By 2030, almost half the world’s large the 2020s, the UK is likely Meeting the challenges of the companies are expected to be based in emerging markets. to adopt an increasingly Anthropocene age will be our mercantilist economic greatest collective political task. strategy as a result of Brexit. deficit PART 2: 10 MAJOR CHALLENGES BY 2030 Due to demographic trends, a structural deficit is likely to re-emerge 1. Stagnation the 2. A new economy: 3. The end of the long 4. Automation: 5. A state under strain: by the mid-2020s. new normal? caring and creative? twentieth century: work A brave new world public finances in an and business transformed ageing, low growth society Even as what we do and how Technological, social and Technological and cultural Intelligent automation will A combination of low £13 billion we work changes, the UK is demographic change will shifts will transform how radically reshape how we growth, political choices and likely to remain trapped in a shape the economy. Brexit, we work and reshape work, but won’t end work demographic change will Social care crisis: The adult social care funding gap is expected low growth, low interest rate and the likely depreciation of how businesses organise as we know it, at least in the shrink the state and put the to be £13 billion – 62% of the expected budget – in 2030/31. decade driven by demographic the currency, will accelerate themselves. Work is set to 2020s. Who benefits and who UK on course for a structural shifts, productivity trends, this change. The service become more insecure, more loses out will be shaped by deficit by 2030. weak investment, weak sector will grow, with creative polarised and more freelance. politics. labour power, high levels of and caring work surging. debt, and the headwinds of a By contrast, manufacturing, 2 in 3 slowing global economy. administration, the public Work, but not as we know it: Up to two-thirds of current jobs – sector and insurance will 15 million – are at risk of automation. likely shrink.
6. Public services – 7. Inequality unleashed: 8. Intergeneration 9. Data: ‘social’-ism for the 10. A decade of personalised, devolved, age, region & class strain game 21st century? democratic distress digital 11 x The income of high-income households is forecast to rise 11 times Public services, particularly Technological, economic Sharp, growing The ubiquity of data collection The political aftershocks faster than for low income households in the 2020s. health and social care, will be and demographic change and unprecedented and analysis will challenge of Brexit will reverberate. under acute financial pressure will supercharge inequalities, intergenerational differences political institutions, and Growing inequalities as demographic changes with middle and low income over income and housing are create new models of in political voice, institutions increase costs. Decentralisation households struggling through likely to be a key feature of the ownership, economic activity of representative democracy of control and personalisation a low-growth living standards 2020s, with powerful political and wealth. Building a public, under stress, and bumpily green revolution? of delivery will increase due decade, even as the rich and economic consequences. democratic data infrastructure embedded devolution are Low-carbon energy generation is expected to account for to technological and political pull away. in 21st century will be a all likely. around 75% of energy generation by 2030. change. Devolution will mean similar challenge to creating local authorities have a greater welfare state in 20th. role in funding and delivering public services. $10.6 trillion Data, the fifth factor of production? Globally, the ‘Internet of Things’ is expected to add US$10.6 trillion to real GDP by 2030
4 5 A CHANGING ECONOMIC WORLD ORDER A DEMOGRAPHIC TIPPING POINT A decade of high debt, sluggish productivity, low interest rates and weak growth The UK’s population will grow quickly in the 2020s • Advanced economies are likely to struggle to escape conditions of secular stagnation without co-ordinated • The UK is set to be the fastest growing major country in Europe, with its population overtaking France by 2030. action. Demographic headwinds will further slow global growth. • By 2030, the UK will be on course to become the biggest country by population in Europe by 2050. Economic power shifting to the global south The UK will age dramatically • The world will converge economically, and by 2030 emerging economies will account for almost half of global output. • The 65+ population will surge from 11.6 million today to 15.4 million by 2030. By contrast, the working age Globalisation, but not as we know it population (16-64) will increase by only 3%. • Globalisation will evolve and plateau, trade patterns shift and urbanisation drive growth. The architecture • There will be a surge in the ‘oldest old’, with the over 85s population nearly doubling by 2030. governing the global economy will come under pressure as American hegemony frays. We will become more diverse • Diversity will become commonplace, with nearly a third of the UK’s population from a BAME background by 2030. D TR BREXIT: RL AN THE O S AFTERSHOCK W F O Brexit will powerfully reshape the UK’s political and A economic order. Growth investment and immigration R will be lower, the economy more managed, and the
constitution remodelled relative to remaining in the M
EU. E D
TECTONIC TECHNOLOGICAL SHIFT Health technology: DECARBONISATION DECADE • Nanotech and biotech The UK is committed to slashing its carbon emissions by 2030 • Human divergence due to augmenting technologies • Meeting this target will require a 31% overall reduction in current annual carbon emissions by 2032. • Stem cell applications This will drive a radical change in how we produce and consume energy • We will consume as much energy today as in 2030, but low-carbon energy generation is expected to account Decarbonising resource Automation & manufacturing IT & digital for around 75% of generation. technologies: technologies: technologies: Climate change, resource depletion, biodiversity loss, and natural cycle disruption • Rapid improvements in • Advances in intelligent automation battery improvements and and machine learning ushering in • Rise in quantum computing and will accelerate – we will run up against the natural limits of our economic model renewable tech a second machine age super computer capabilities • We can only use a fifth of known known oil, coal and gas reserves if we are to avoid systemic climate change • Nuclear fission • Networks of autonomous • Ubiquitous digitalisation, data • Two-fifths of the global population is predicted to live in water deficit in the next decade. electric vehicles rich and growth of ‘smart cities’ • Advanced new materials • Key resources for sustaining human society such as phosphorous – necessary to produce large quantities • Rapidly improving robotic • Blockchain transforming finance of food – will be radically depleted by 2030 and can’t be produced synthetically. technologies
6 7 BRITAIN AT THE PERIPHERY?
Even as the global economy slows, other economic shifts will accelerate in the 2020s:
• economic power will gravitate eastwards, trade patterns will alter and comparative advantages shift • the urban centres of the major emerging markets will be the driving force of the world economy • the nature of globalisation itself will evolve, with a relative decline in the trading of goods but a rise Trump’s election could signal America’s withdrawal from its role underpinning the liberal in services traded economic world order, increasing global economic • globally, there will be an increasing premium on modernised institutions that can regulate new or and political turbulence and weakening the US FROM STUFF TO SERVICES evolved forms of risk, from climate change and mass migration, to tax evasion and terrorism. economically. The US will retain very significant The value of trade in services will soar from $1.6 trillion strengths in innovation, technology, services and to $8 trillion between 2012 and 2030. Given the UK’s advanced manufacturing, with tailwinds from its comparative advantage in services, this represents natural resources base, demographic trends and China’s rise means that it will have more a significant exporting opportunity. geopolitical power. Its economy is projected to large companies ($1bn+) than either the US or be larger in 2030 than those of the UK, Germany, Europe in 2030 – by which time nearly half of India and Japan combined. URBANISATION these large companies will be headquartered The largest 750 cities will drive growth between now and in emerging markets. 2030, by which time they will contribute 61% of global GDP – up from the mid-50s today.
DIVERGING FORTUNES The below chart shows the global income incidence By 2030 it will also have 17 of curve if the relative size of each country had remained the global top 50 cities by GDP unchanged over the period 1988–2020. – more than North America and four times more than Europe. This is likely to be repeated in the 2020s – the majority will experience growth, but middle income households in developed economies will continue to struggle, even as the top decile does well. This suggests that globalisation brings challenges but domestic policy is critical to shaping outcomes.
Figure 1: Global income growth incidence curve if the relative size of each country had remained unchanged, 1988-2008
175 150 125 100 However, a rapidly ageing 75 population, credit bubbles, political uncertainty, and the 50 transition to an open and 25 consumption-led economy may 0 undermine its rise. 25 0 10 20 30 40 50 60 70 80 90 100 59% Poorer Percentile of glo al income distri ution Richer By 2030 emerging Constant population Consistent set of countries economies will account for Original almost half of global output, South-to-south trade will have risen sharply by 2030, and while trade Source: Cortlett 2016 up from around just over a in goods will have doubled by that time, trade in services will have more quarter today, with 59% than quadrupled. of global middle-class Africa rising consumption coming By 2030, Africa’s working-age from Asia. population is expected to almost Sources: have overtaken China’s. Oxford Economics 2015; Dobbs et al 2015; PwC 2015; PwC 2011; Dobbs et al 2012; Economist Intelligence Unit 2015, WTO 2014; ESPAS 2016; Bughin 2016.
8 9 THE 2020S: A DEMOGRAPHIC TIPPING POINT FOR THE UK The UK’s population will grow significantly, age dramatically, and become increasingly diverse. Diversity will spread beyond the cities. Despite Brexit, net migration rates are likely to remain high, albeit more controlled, driven by social and economic Figure 3: Share of white population in local authority populations in England in 2011 (left) and projections for 2051 pressures. By 2030, the UK will be on course to become the largest country by population in Europe with one of 2011 2051 the most diverse populations in the world. 29 70 9 70
71 75 71 75 THE UK’S POPULATION WILL GROW QUICKLY IN THE 2020S 76 80 76 80 • The UK will be the fastest growing major country in Europe, with its population overtaking France by 2030. 81 85 81 85 • Population growth will be centred in the cities – London is projected to grow to 10m people by 2030, up from 8.5m. 86 90 86 90 Figure 1: The UK’s population will grow rapidly in the 2020s, relative to other European countries. 91 95 91 95
88 000 000 96 99 96 100
84 000 000
80 000 000 ermany
76 000 000 France Italy 72 000 000 UK 68 000 000
64 000 000
60 000 000 2015 2020 2030 2040 2050 2060 2070 2080 Source: IPPR analysis (2016) for population project of largest EU countries Source: Griffith and Halej 2015 THE UK WILL AGE DRAMATICALLY IN THE 2020S DIVERSITY WILL BECOME COMMONPLACE • The 65+ population will grow by 33% between 2016 and 2030 – from 11.6 million to 15.4 million. By contrast, the working age population (16-64) will increase by only 2%. • Britain in 2030 is expected to be almost as diverse as the USA is today. 33% • There will be a surge in the ‘oldest old’. The over 85s population will nearly double by 2030. The non-white population is expected to rise from 14% in 2011 to about 21% While the working age by 2030 and a third of the population by 2050. • One in three babies born in 2016 are expected to live to 100 or more. By contrast, if born in 1916 population will barely there is only a 1% chance of still being alive. • Net migration is expected to account for almost half of population growth grow, the 65+ population is Figure 2: The older population will surge relative to the working age population. This will put pressure on the in the 2020s. expected to increase by an care system and the public finances, and reshape household and working patterns. • While immigration is expected to be lower and more controlled after Brexit, estinated 33% between economic and social demand are likely to continue to drive relatively high levels 2016 and 2030 180 of immigration to the UK. 170
160 16 64 150 65 74 140 75 84 130 85 120
110
100 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Source: IPPR analysis of ONS (2015) National Population Projections: 2014-based Statistical Bulletin
Sources: Rajeswaran and Sunak 2014; ONS 2015b; Eurostat 2016; Richards 2016.
10 11 STAGNATION BLUES?
A GLOBAL LOW GROWTH DECADE A more fragile, less dynamic world economy will increase geopolitical competition. Economic abnormalities will multiply, from negative yields to deepening secular stagnation. Major risks including unsustainable credit Global growth will slow in the 2020s. Demographic change, weak productivity bubbles, climate crises, and energy shocks will pose further threats to the global economy. The near-stagnation of advanced capitalist economies– despite extraordinary monetary policy stimulus – and the slowdown of growth, environmental degradation, high levels of debt, inequality, and sluggish emerging economies will sharpen the need for co-ordinated reform of global economic institutions and open up demand will all act as economic headwinds. space for heterodox, radical policy action.
A GLOBAL DEMOGRAPHIC CRUNCH WILL SLOW WORLD GROWTH
• An ageing global population will slow the world’s Figure 1: Average annual % change in real GDP Figure 2: Increase in world population relative to 2000, by broad age group, 2000-2050 growth trajectory. Due to demographic change 7 3.5 the global economy is forecast to expand roughly 6 threefold between 2014 and 2030, compared to 3.0 5 almost six fold in the preceding 30 years. 60 or over 4 2.5 25 59 • The global working age population will shrink. 3 10 24 For example, China is expected to lose 10% of its 2.0 working population by 2030. 2 0 9 1 • As indicated in Figure 1, global growth is 1.5 0 expected to slow. Bra il Russia India China U UK EU orld 1.0 Population si e relative to 2000 Population si e relative • In marked contrast, the demographic conditions 2014 2020 2021 2030 0.5 of the ‘Great Moderation’ era, Figure 2 2031 2040 2041 2050 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 demonstrates how sharply the global population Source: PwC, 2015 Source: UN, 2015 will age in the 2020s.
DESTINATION STAGNATION: WEAK PRODUCTIVITY AND DEMAND
• Most productivity forecasts suggest the Figure 3: nnual average growth (%) in GDP per hour worked Income inequality is set to surge. Despite the long-term decline of global interest rates, recent slowdown in productivity growth is due 8 Figure 4: OECD Gross earnings inequality 2010–2060 developed economies appear unable to generate to continue. 7 8 strong, sustainable growth. 6 • Advanced economies appear to be settling into 7 Figure 5: Comparison of real rates in AEs & EMEs 5 6 the trap of secular stagnation. Without significant 7 4 5 6 and co-ordinated policy action they will struggle to 3 4 5 escape the trap in the 2020s. 2 3 4 1 2 • $13 trillion of government debt – more than half 3 0 1 the outstanding stock of developed economy 2 U UK
Italy 0 1 apan public borrowing – now has a negative yield. Korea Ireland France U UK ordics Canada Italy Australia ermany Chile
Europe 5 0 Israel pain Abnormalities like this are expected to multiply. Korea apan Ireland France Austria Poland reece Iceland Finland orway Canada weden Belgium ungary Portugal 1 Australia enmark ew ealand ermany outh Europe atin America 1980 1985 1990 1995 2000 2005 2010 2015 C ech Rep
• Global current account imbalances are expected lovak Rep wit erland etherlands to return to their pre-crisis peaks by 2030, in part 1950 1972 1972 1995 ew ealand orld real rate Advanced economies driven by global monetary policy. 1995 2004 2004 2013 Emerging economies 1980s average OEC 21 countries OEC 29 countries Source: OECD 2015 Source: Rachel and Smith 2015 2010 2060 Source: OECD 2014
RISING INEQUALITY AND HIGH LEVELS OF DEBT WILL CONSTRAIN DEMAND MAJOR ECONOMIC RISKS
• Income inequality within OECD countries is expected to rise by upwards of 30% in the coming decades. Demographic and productivity trends point towards a slow growth, low inflation decade. On top of this, On current trends, the gender pay gap will take 170 years to close. there are a series of major risks that could significantly worsen the health of the global economy in the 2020s:
• Global debt is $57 trillion higher than in 2007, and total debt levels are not expected to return to pre-crisis • A global energy price shock driven by geostrategic instability and resource conflict. levels until the mid-2020s. This will constrain consumption and investment. • Economic instability and lack of demand through the premature de-industrialisation of emerging economies due to automation. Biodiversity degradation, water management crises, and major natural catastrophes. • Asset bubbles, created by excessive private credit growth. • China experiencing a ‘hard landing’, failing to transition smoothly to a more mature, consumption led Sources: growth model and deleverage its credit bubble. Dobbs et al, 2015; UN, 2015; PwC, 2015; Manyika et al, 2015; OECD, 2012; Summers, 2015; OECD, 2014; OECD, 2014; Turner, 2014; World Economic Forum; 2016a • Largescale involuntary migration caused by climate change, interstate conflict, or internal displacement. 12 13 BREXIT IS EXPECTED TO REDUCE GROWTH AND LOWER LIVING STANDARDS
• By 2030 the economy is forecast to be up to Figure 1: The UK economy is expected to be smaller by 2030 than if it had remained an EU member. £55 billion smaller than it would have been 2020 2025 2030 without Brexit. 0
• In a ‘pessimistic’ scenario, where trade 1 costs increase significantly,households are expected to be £1,700 worse off per year 2 FTA scenario by 2030. 3 TO scenario
BREXIT: 4 THE 5 6 AFTERSHOCK Source: PwC 2016
Brexit will profoundly THE UK'S POLITICAL ECONOMY WILL BECOME MORE MANAGED IN RESPONSE TO BREXIT reshape the UK. It will be a • Given the painful trade-offs involved in Brexit, Brexit is likely to exacerbate longstanding economic weaknesses. The UK’s low productivity rates fundamental break in the existing and the political emphasis placed on controlling compared to most other advances economies means we are likely to rely on a weaker currency as a political-economic order. Painful freedom of movement, it is likely that UK goods key route to retaining competitiveness in the 2020s. and services will face higher export costs in Figure 2: Productivity levels (GDP per hour worked, US$, 2010 prices, purchasing power parity) for trade-offs are almost certain. Growth the 2020s. Europe-24 nations* and the US, 2014 is expected to be lower, investment • To offset these costs, the UK is likely to pursue 80 a managed depreciation of the currency. 70 rates worse, and the public finances Brexit is consequently likely to lead to a more 60 weaker as a result of Brexit. managed, neo-mercantilist political economy. 50 40 • A depreciating currency will reshape the Given the likelihood of significant new barriers to 30 sectoral balance of economy and hit the living trade, a managed depreciation of the currency 20 standards of the poor hardest. 10 is also likely. A more mercantilist, interventionist 0 political economy will drive sectoral change, U UK Italy
increase consumer costs, and hit living standards. pain France Austria Poland reece Iceland Estonia weden Belgium ungary lovakia Portugal enmark Socially, migration is likely to decline and become ermany C ech Rep. wit erland etherlands more controlled. Politically, Brexit underscored uxem ourg the UK’s economic, social and cultural divisions Source: Jacobs et al 2016 and is likely to be the trigger for a decade of MIGRATION IS LIKELY TO FALL IN THE SHORT WHILE THE DIVISIONS THE REFERENDUM EXPOSED WILL ENDURE constitutional and political upheaval. • Net migration is likely to fall in the short term The UK’s poor trade performance is unlikely to improve in the wake of Brexit. If it does, it is likely to be due to economic shocks. In the 2020s, overall primarily due to a decline in imports, not a significant increase in exports. net migration is likely to be more controlled but Figure 3: Balance of trade, percentage of UK GDP, Q1 1955–Q1 2016 remain relatively high by historic standards due to economic and social demand. 3.0 2.5 • Brexit exposed a nation divided by education, 2.0 age, region, income, housing tenure and 1.5 occupation – these divisions will endure. 1.0 0.5 Attitudes to migration, identity and place – 0.0 central to the referendum – are likely to continue 0.5 to reshape traditional political coalitions. 1.0 1.5 2.0 2.5 3.0 3.5 4.0 1 1955 3 1957 1 1960 3 1962 1 1965 3 1967 1 1970 3 1972 1 1975 3 1977 1 1980 3 1982 1 1985 3 1987 1 1990 3 1992 1 1995 3 1997 1 2000 3 2002 1 2005 3 2007 1 2010 3 2012 1 2015 £55bn Source: Jacobs et al 2016 Sources: Dhingra et al 2016; IFS 2016; Richards 2016; PwC 2016; A ‘hard’ Brexit could Clarke and Whittaker 2016; OBR 2016; Bank of England 2016. cost the UK £55 billion by 2030
14 15 TECHNOLOGICAL MILESTONES BY 2025
KEY INFORMATION TECHNOLOGY TRENDS 1 trillion Data in the fabric of everyday life: • Rapid advances expected in supercomputers, 1 trillion sensors connected to the internet quantum computing, cloud computing, TECTONIC TECHNOLOGICAL complexity theory, intelligent sensor CHANGES: A BRAVE NEW WORLD networks and ubiquitous computing will create a revolution in computer capabilities. AI on the map Accelerating technological change will transform how we live • The Internet of Things and the digitisation of more areas of life, which will generate The first Artificial Intelligence machines and work, communicate and consume. Political institutions will unprecedented volumes of data. sitting on boards be reshaped, social norms changed, and economic relationships • Smart cities will use data and digital restructured. Radical advances in four key areas – automation technologies to increase productivity, quality and manufacturing, information technologies, resource of life and improve the environment. 5% technologies, and health technologies – will make the dreams of • The rise of the sharing economy (or ‘platform economy’). By 2030, the sharing Micro production accelerating: science fiction increasingly the reality of ordinary life by 2030. economy is forecast to be worth almost 5% of consumer products printed in 3D $2 trillion globally. There is nothing inevitable though about how these forces will reshape our world, or who will win and lose from change. This will depend on the choices we make and the • Blockchain technology could radically demands we put forward. The development, deployment and impact of technology is a transform the financial sector over time, world 1st collective choice, mediated by political, social, economic and cultural institutions, values dramatically reducing the cost of financial and preferences. Progressives should therefore seek to get the ‘future in their bones’, transactions, improving the transparency, Medical breakthroughs: embracing and accelerating technological change while building the institutions that mean speed and reach of the financial system, First successful 3-D printed organs, rapid improvements its benefits are widely and fairly shared. and eventually ending the need for many in nano-technology, and significant advances financial intermediaries. in cryopreservation KEY AUTOMATION AND MANUFACTURING TECHNOLOGY TRENDS KEY RESOURCE TECHNOLOGY TRENDS • Developments in automation, machine learning and general systems • The energy sector will see dramatic artificial intelligence could transform the workforce, and create new and as yet improvements in smart electric grids, 30% unimagined occupations. microgeneration, advanced batteries and Surging AI displacing white collar work: • By 2030 robots or smart machines are forecast to have on average an IQ higher energy storage, hydrogen energy, CCS, 30% of corporate audits performed by AI than 99% of humans. The explosion in non-human intelligence has enormous nuclear fission, renewable tech. This will economic potential, while also raising profound political and ethical questions. facilitate the localisation, democratisation • A surge in autonomous or near autonomous vehicles is forecast by 2030, and decarbonisation of the energy system. becoming ubiquitous by the mid-2030s. This will transform transport systems, urban 10% design, and personal mobility. KEY HEALTH TECHNOLOGY TRENDS New systems of value: • The development of 3D printing will change the economics of manufacturing, • Biotech and medical breakthroughs 10% of global gross domestic product stored on reducing role of labour costs in location decisions, and increasing the importance of including genomic and epigenetic blockchain technology proximity to the customer. Additive manufacturing will create networks of micro- innovation, synthetic biology, stem cell factories akin to craft guilds, but with modern manufacturing capabilities, with advances, regenerative medicine and tissue radical discontinuities in trade as need for global supply chain eliminated. engineering. • Emergence of ‘smart factories’ cyber-physical systems • Mental and physical augmentation an increase and decentralised models of production. technologies will raise the possibility of The rise of the sharing economy: Globally more trips/ species divergence by 2030, with humans journeys via car sharing than in private cars bioengineering different physical and 2050 mental capabilities. By 2021, the average desktop PC 10% will have the processing speed A non-human transport system emerging: of a single human brain. By 2050, Sources: the average desktop computer UK Commission for Skills and Jobs, 2014; World Economic Forum, 2016b; Driverless cars equalling 10% of all cars on US roads World Economic Forum, 2015; Dobbs et al, 2015; Susskind and Susskind, with the UK close behind. is predicted to have more 2015; Manyika et al, 2013; Davarzani and Purdy, 2015; EY, 2015; Ford, 2015 processing power than all of humanity combined 16 17 BINDING PROMETHEUS: DECARBONISATION DECADE RESPONDING PROACTIVELY TO CLIMATE CHANGE WILL CREATE LONG TERM SOCIAL, Humankind’s Promethean capacity to dominate and reshape the natural BENEFITS environment for its own benefit will hit a limit in the coming decades. • The average household is expected to be £565 better off a year by 2030 due to climate The Anthropocene age – the new geological epoch in which human activity is the central and destructive influence change policy. on the Earth’s ecosystems – will require us to fundamentally change how we produce and consume energy in the 2020s. This imperative will set the UK on a trajectory towards a radically different, low-carbon and increasingly THE LIMITS OF THE ANTHROPOCENE: local and decentralised energy system. This change will – if a just transition to a low carbon future can be MOVING BEYOND A CARBON-BASED effectively managed – bring immense social, environmental and economic benefits. In the process, responding to ECONOMIC MODEL climate change will change how we work, consume, travel and live. • We live in the Anthropocene age, where THE UK IS COMMITTED TO SLASHING ITS CARBON EMISSIONS BY 2030 human activity has a decisive impact on Earth’s ecosystems and across the planet’s • The UK is legally obliged to cut its current annual carbon emissions by 31% by 2032. entire biota and geology. These include • To meet its 2050 target of reducing annual carbon emissions by at least 80% on 1990 levels, the UK will biodiversity loss, resource depletion and have to reduce annual carbon emissions by 4% per year from 2030-2050 natural cycle disruption: 60
Figure 1: CO2 from electricity generation will fall to a sixth of current levels by 2030; low-carbon energy generation will surge. • Due to land-use conversion to produce food, At currents rates of soil Projection of electricity generation by source (TWh) fuel, fibre and fodder, along with targeted degradation, the world 450 hunting and harvesting, it is likely that we are has only 60 harvests 400 Coal living through the sixth mass extinction event, left according to 350 Oil the last being the dinosaurs. the UN. 300 as • Two fifths of the global population is predicted 250 as CC to live in water deficit in the next decade. 200 uclear 150 • The UN estimates that only a fifth of known oil, 100 Renewa les coal and gas reserves can be used if we are to 50 Imports avoid systemic climate change. 0 • Building a collective politics fit for the
2010 2011 2012 2013 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 challenges of the Anthropocene will be crucial Source: Department of Energy and Climate Change (2012) ‘DECC Updated Energy & Emissions Projections – October 2012’ in the 2020s and beyond. Ultimately, it will require a radical transformation in how we THIS WILL DRIVE A RADICAL CHANGE IN HOW WE PRODUCE AND CONSUME ENERGY produce and consume energy and interact with the Earth’s ecosystem. • We will consume as much energy today as in 2030. However, energy will become dramatically greener and more efficiently used. • By 2030, low-carbon energy generation is expected to account for around 75% of generation. The energy infrastructure – production, storage, and distribution – will be more localised and decentralised. • Transport systems will decarbonise. Non-traded emissions from vehicles will fall by over 50% by 2030. The rise in electric, driverless transport will help decarbonise the UK and transform how we organise our towns and cities. Figure 2: Carbon emissions will be significantly reduced by 2030, particularly in power generation.
Carbon dioxide emissions (MtCO2) by source (DUKES categories) 500 Industry
400 Off road
Power stations 300 Residential
200 ervices
Transport: other 100 Transport: road 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Source: Department of Energy and Climate Change (2015) ‘Updated energy and emissions projections: 2015’
18 19 PART 2: 10 CHALLENGES IN THE 2020S
We are called to be architects of the future, not its victims
R Buckminster Fuller
20 21 WEAKENED ECONOMIC WEAK FOUNDATIONS • The economy will remain unbalanced, over-reliant UK investment is comparatively low by international Figure 2: GVA per worker (£) for European cities, 2011 FOUNDATIONS on consumption over investment and trade, with standards, and disproportionately concentrated 0 – 30,713 significant regional disparities, and with services in London and the South-East. 30,713 – 44,408 44,408 – 55,253 dominating over manufacturing. Brexit is expected Figure 1: Gross fixed capital formation (% of GDP), The 2020s is likely to be a low- 55,253 – 66,983 to worsen these trends. selected countries and aggregates, Q1 1997–Q1 2016 66,983 – 99,819 growth decade. Brexit will • Morbid symptoms will multiply, reflecting 50 exacerbate this trend, but not structural flaws in the UK’s economic model: weak cause it. The UK’s productivity investment rates, rising indebtedness, and chronic fiscal and trade deficits are set to continue. 40 performance is likely to continue • Financialisation is forecast to deepen. The UK’s to disappoint. Demographic bank sector assets are forecast to rise from 30 change will constrain growth, as around 400% of GDP to 600% by 2030 and 950% by 2050. will the broader slowdown of the 20 • As indicated in figure 2, low investment global economy. Fiscal policy is is a symptom and cause of the UK’s poor likely to remain unsupportive in productivity – nine out of 10 cities in the 10 UK are below the European average for city the medium term, while monetary productivity, with more than half among the policy will reach the limits of its bottom quarter for productivity. 0
While this partly reflects the part-time nature 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 capacity to stimulate an economy Source: Bessis 2016 of the UK’s labour market, the UK will have to UK U China Euro area average OEC average that will be increasingly vulnerable address this gap if it is to prosper in the 2020s. Source: data from World Bank 2016
to economic shock. A LOW GROWTH DECADE Without significant reform, longstanding weaknesses in the UK’s economic model will • The UK is consequently likely to settle into a low Figure 3: Bank of England base rate and quarterly Figure 4: GVA per capita by region for selected remain: poor productivity performance, weak growth, low productivity equilibrium. GDP growth compared with the same quarter in the European countries, purchasing power parity previous year, January 1976 to June 2016 real wage growth compounded by surging • This is likely to mean many working age 100 000 Brexit-related consumer inflation, sluggish households will have experienced two decades public and private investment rates, yawning of weak income growth by 2030. Inner ondon
Q1 1976 Q2 1977 Q3 1978 Q4 1979 Q1 1981 Q2 1982 Q3 1983 Q4 1984 Q1 1986 Q2 1987 Q3 1988 Q4 1989 Q1 1991 Q2 1992 Q3 1993 Q4 1994 Q1 1996 Q2 1997 Q3 1998 Q4 1999 Q1 2001 Q2 2002 Q3 2003 Q4 2004 Q1 2006 Q2 2007 Q3 2008 Q4 2009 Q1 2011 Q2 2012 Q3 2013 Q4 2014 Q1 2016 80 000 trade deficits, heavily indebted households, 8% 20% am urg metropolitan region regional disparities, extensive financialisation • As figure 3 indicates, growth has stuttered even 7% and rent-seeking. In the process, morbid as interest rates approach zero, with monetary 6% 15% le de France 5% 60 000 symptoms will multiply: negative yields, interest policy failing to generate adequate demand. 4% 10% 3% rates near the lower bound, underinvestment The 2020s is likely to be a low-growth, secularly 2% 5% 1% and stagnant living standards. stagnant decade unless expansionary demand- 40 000 0% 0% side policies are pursued alongside structural -1% Of course, real pockets of strength will continue to reform to boost investment. -2% -5% exist. However, the UK will have to undertake deep -3% -4% -10% 20 000 reform of its economic model – structurally as well • Figure 4 shows that without reform, whatever -5% growth the UK achieves is likely to be unevenly -6% -15% as fiscally – to thrive as a more equal, prosperous -7% and open economy in the decades ahead. distributed, given that the UK is the most 0 UK
unbalanced major economy in Europe, even after Italy pain France 2 Jan 1976 2 Jan 1978 2 Jan 1980 2 Jan 1982 2 Jan 1984 2 Jan 1986 2 Jan 1988 2 Jan 1990 2 Jan 1992 2 Jan 1994 2 Jan 1996 2 Jan 1998 2 Jan 2000 2 Jan 2002 2 Jan 2004 2 Jan 2006 2 Jan 2008 2 Jan 2010 2 Jan 2012 2 Jan 2014 2 Jan 2016 Poland Finland
accounting for variations in population. weden Belgium enmark Year-on-year GDP growth rate (LHS) Official bank rate (RHS) ermany etherlands Source: Jacobs et al 2016 Source: Jacobs et al 2016
GDP 2016 2030 London and the South East are the only regions of the UK where GDP per head has surpassed its pre-crisis peak 22 23 A RADICALLY RESHAPED ECONOMY
Demographic, technological and global economic trends are likely to reshape The UK’s comparative advantage will be as a global hub for high-skilled creative and technical work, and providing remote, high-quality syndicated services and luxury goods for emerging consumer markets. Success in these the economy’s structure by 2030. Brexit, whatever deal is secured, is likely to areas is partly dependent on the type of trading relationship the UK secures with Europe and the wider world. accelerate this trend. The service sector is expected to grow, producing ‘good’ The ‘sharing’ and ‘circular’ economy is set to surge, while the growth of a digital, zero-marginal-cost commons and ‘bad’ jobs even as mid-skilled work decline. Manufacturing will shrink as a will support an emerging post-capitalist economy in terms of ownership and exchange. share of the economy, though a depreciating currency might lead to reshoring in some areas. The benefits of sectoral change will be spatially divided, creating winners and losers, socially and geographically. MANUFACTURING Manufacturing will shrink relative to the overall economy. Employment in the sector is forecast to decline by 600,000 to 2 million, SERVICES yet advanced and additive manufacturing are likely to expand. Education, health and care are expected to add over 1 million jobs by 2030, business services around 1.5 million, and the creative sector 1 million jobs.
THE PUBLIC SECTOR There will be more self-employed workers in TECHNOLOGY & EMPLOYMENT the 2020s than public sector employees. Technological change will displace some forms of work. For example, 60% of retail jobs – 2 million roles – are forecast to go by 2030. However, cumulatively the economy is forecast to create around 3 million new jobs by 2030.
REGIONAL IMPACTS As the sectoral mix of the economy evolves, employment growth will vary by region, with London EMERGING INDUSTRIES and the South East benefitting most. The space sector is forecast to grow from £8 billion to £40 billion by 2030.
The design and management of ‘smart cities’ will be worth £40 billion by 2030.
The UK’s app economy is projected to increase 10-fold between 2013 and 2025, to £30.8 billion. £97bn Digital, health innovation, energy and advanced Sources: manufacturing could add up Transport for the North 2016; IFS 2016; Dhingra et al 2016; PwC 2016; UK Commission for Skills and Jobs 2014; £97 billion to the north of Hatfield 2017 forthcoming; UK Government 2014; UK Government 2013; Kelly 2016. England’s economy in the coming decades 24 25 DIFFERENT JOBS, DIFFERENT LIVES How we work will change radically in the 2020s. Technological change will £9.5m not displace human labour, but it will lead to significant changes in the tasks FTSE 100 CEO pay by 2030, we undertake, with a greater emphasis on problem-solving, creative work on current trends – 350 times the median annual household and interpersonal skills over routine and manual tasks. This will polarise what income, up from F THE 144 times today. people do – different jobs will lead to ever more different lives. O WO Technological, political and social trends will make work more flexible and irregular, offering autonomy but P R threatening to universalise labour market insecurity. Digital platforms will continue to reshape traditional labour O L markets. There will be a surge in good ‘high touch’ or ‘high tech’ jobs, alongside a substantial tail of low-pay, T D low-power work. Businesses will become flatter, more global, and more virtual while self-employment will continue to rise.
The politics of a changing labour market will be fundamental to policy debates in the 2020s – progressives must respond by ensuring change can enhance power, voice and income for ordinary workers.
T E M C O H D WORK WILL BECOME MORE FLUID, MORE FREELANCE, 66% N F AND MORE INSECURE O R The Bank of England L E estimates that two-thirds O S Fluidity will become normal and insecurity near-universalised. Technological GICAL advances combined with changing working cultures will drive an increase in of current jobs are at risk of mobile working, with fewer locational constraints on work. Portfolio careers will automation, with the lower The divergence between those with ‘privileged’ and ‘insecure’ work looks set to continue, with stark disparities in become increasingly common. Flatter managerial structures will give greater paid generally most both the quality of work and rewards for it. London, for example, is the only region in which more than half of jobs responsibility to individuals in shaping and controlling their work. Labour market at risk. are managerial or professional. insecurity, already prevalent for many, will be the experience of work for the Figure 1: Percentage of all employees within UK regions/nations by Standard Occupational Classification, 2010 majority of people by 2030. Northern Ireland Managers, directors Technological change, including the advance of algorithmic management and mobile North East & senior officials technologies, will mean digital Taylorism for some, and increased autonomy for others. Wales Professional occupations The growth of digital platforms will facilitate the rise of the gig economy, with work more piecemeal and task-based. Yorkshire & Associate prof. the Humber Without effective regulation it will worsen working conditions for many while reducing wages. Work will be polarised & tech. occupations West Midlands between those with greater control and flexibility, and those whose time is ever more controlled. Administrative East Midlands & secretarial occupations There will be more high–tech, high touch roles involving greater skills and more creative, non-repetitive forms of UK Skilled trades occupations work (where humans will retain comparative advantages over robots for the foreseeable future). At the same time, North West Caring, leisure & other a long tail of low-skilled work is likely to remain in place, with a growing divide in terms of autonomy, agency and East service occupations Sales & customer reward at work. South West service occupations South East Process, plant & machine operatives London Elementary occupations 0% 20% 40% 60% 80% 100% Source: Jacobs et al 2016
HOW TO REPRESENT AND EMPOWER LABOUR IN A CHANGING LABOUR MARKET WILL BE A CRUCIAL QUESTION: 15m 14m 90% The number of jobs at risk of The number of people who are Percentage of private sector Sources: automation in the next already ‘independent workers’ – workers, on current trends, that Haldane 2015; O’Connor 2016; UK Commission for Skills and Jobs 2014; Manyika et al 2016; IPPR analysis of BIS 2016. two decades a number that is expected to surge won’t be unionised by 2030
26 27 INTELLIGENT WORK AND AUTOMATION: NOT POST-HUMAN, BUT PEAK HUMAN? AUTOMATION: • Human work will not disappear by 2030. Figure 1: Distribution of occupational employment in the UK by probability of automation Technology will, however, radically transform 8,000,000 how we work. The OECD estimate that almost Low Medium High A FUTURE half of all jobs will change significantly due to 37% 28% 35% BETWEEN automation. 7,000,000 • Nonetheless, up to 15 million jobs – two-thirds STAR TREK of the total – are at medium to high risk of 6,000,000 being automated in the coming decades. Both routine and non-routine work will be displaced. AND THE MATRIX 5,000,000 • Over time there will be fewer and fewer tasks – and in time, jobs – where humans can outperform Automation is both a promise and 4,000,000 machines. Given this, it is likely we are at a threat, offering the possibility of ‘peak human’ in terms of human labour being material abundance and greater the most important factor of production. 3,000,000 leisure set against the risk of • The speed and impact of automation is though ultimately a political choice. growing economic inequality and 2,000,000
mass unemployment. 1,000,000 Yet the reality is likely to be somewhere in between the post-scarcity promise of Star Trek 0 and the hierarchical machine world of the Matrix. 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 Work will be increasingly transformed but not Managers, directors & senior officials Professional occupations Associate professional & technical occupations wholly displaced, at least in the 2020s. Many Administrative & secretarial occupations Skilled trades occupations Caring, leisure & other service occupations occupations will disappear but new industries will emerge. Automation and AI networks will reshape Sales & customer service occupations Process, plant & machine operatives Elementary occupations how we live and play and, in the process, our social institutions and built environment. Source: Haldane 2015
There will be economic winners and losers. At its REACHING FOR ABUNDANCE: SHAPING TECHNOLOGICAL CHANGE FOR THE COMMON GOOD extreme, automating technologies risk entrenching • Technology is not neutral; politics and culture shape its use and who benefits. Technological change a new form of economic feudalism: those who could increasingly support a world of Star Trek-like abundance. The alternative will be the growing own the robots will reap the rewards, the rest concentration of economic power – a neo-feudal machine age. will struggle as human labour becomes less and less important in the production process. • As technological capabilities accelerate the liberating potential of AI and robotics will grow. We should demand Ownership of capital is therefore likely to become the world of Star Trek, beginning to build the social and economic institutions in the 2020s that will prepare for a increasingly critical in the future. However, the world – still distant – when human labour becomes increasingly obsolete, when work is divorced from economic bigger immediate challenge is not the imminent compensation, and when the price system breaks down as technology allows for a world of near-zero-cost rise of the robots but that too many people will production and distribution. remain trapped in robotic, drudgery-filled and • We should therefore seek to accelerate technological change – rapid automation should be a political project low-productivity jobs. In this context, accelerating – while building institutions that ensure that its benefits are widely shared and democratically governed. automation is a key political project. • This will require new models of ownership, higher wage floors to incentivize automation and boost The goal should be to embrace the technological the wage share, an education system that promotes creativity and skills that complement machines, potential of modernity, accelerating into the future a shorter working week to fairly share productivity gains, and potentially a universal basic income with all its liberating possibilities, while building new to supplement labour market income. institutions around ownership, work, leisure and investment, where technological change is shaped by the common good. 50% Two-thirds of existing jobs are at risk of automation in the next two decades, while Sources: 50% are set to be radically Frey and Osborne 2015; Srnicek and Williams 2015; Varoufakis 2016; Arntz et al 2016; Berg et al 2016; Frey and Osborne 2013. reconfigured by automating technologies 28 29 A STATE UNDER STRAIN PUBLIC FINANCES THE STATE WILL BE SMALLER AND MORE FOCUSED S IN THE 2020 • Government spending as a share of GDP is Figure 1: Composition of government non-debt interest spending over time. projected to fall to its lowest postwar level Brexit will put the public finances (around 36%) by 2019/20. This trajectory will 1997 98 under significant short-term strain. continue into the first half of the 2020s unless fiscal policy changes significantly post-Brexit. Two longer-term trends will further At the same time, spending will be more 2007 08 reshape the state and health of the focused on pensions and health. public finances in the 2020s. • Even with lower expenditure, the public finances will be acutely vulnerable to shock. Brexit is 2014 15 Falling expenditure as a share of GDP will reduce expected to significantly worsen the state of the the size of the state while the composition of public finances. On top of this, current forecasts expenditure will shift towards older people and of the relative health of the public finances in the 2020 21 health spending. At the same time, the deficit 2020s rely on significant improvements in wage will strike back. Due to demographic change, a and GDP growth. 0 20 40 60 80 100 structural tax gap will emerge by the mid-2020s • What and who the government spends money Older people ealth efence security amenities elfare disa ility Other Education Economy on current trends. Fiscal fragility, whether due to on will have shifted significantly by the early weak economic growth, falling rates of migration, Source: Cortlett et al 2015 2020s. Without policy change, it means the state or stagnant wages, are all further risks. Given this, will be very different in size and scope by 2030 a strategic review of taxation – both of revenue compared to the 2000s. and expenditure – will be critical if the public finances are to sustainably meet the challenges of the future. THE DEFICIT STRIKES BACK: THE PUBLIC FINANCES ARE NOT SUSTAINABLE OVER THE LONGER TERM
• An ageing society will drive demand for public A structural tax gap will emerge in the late 2020s as spending liabilities exceed tax revenue due to spending from the mid-2020s onwards. For demographic shifts. At some point, this will likely require either increasing tax revenues, reducing example, spending on health, long-term social expenditure, or a combination of the two. Which route the UK takes to put itself on a path to long-term care, the state pension and other old-age benefits fiscal sustainability will be a key political debate in the 2020s. are forecast to increase annual spending by around Figure 2: Projected total government managed expenditure and total government receipts (% of GDP), 2.5 per cent of GDP between 2019/20 and 2030. 2014/15–2030/31
• The tax gap between receipts and expenditure is 41 forecast to grow over the back-half of the decade as a result. This should not be overstated; by 40 2030 the gap will only be 1.2% of GDP, and due to return to 2015/16 levels only after 2050. 39 • Over the longer term, the difference between expected spending and forecast tax receipts 38 would rise to £341 billion by 2050 – almost double the expected 2016/17 deficit as a percentage 37 of GDP. 36
35 2014 15 2016 17 2018 19 2020 21 2022 23 2024 25 2026 27 2028 29 2030 31 2032 33 2034 35 2036 37 2038 39 2040 41 2042 43 2044 45 2046 47 2048 49 2050 51
Total managed expenditure Total receipts £100bn Source: Jacobs et al 2016
Public borrowing is forecast to be £100 billion higher by 2020/21 as a result of Brexit than it otherwise would have been
30 31 THE FUTURE OF PUBLIC SERVICES:
UNDER PRESSURE At the same time, how we design and deliver public services will change. Fiscal, demographic and technological trends will drive a transformation in Public services are set for a difficult decade. Demographic change will drive public services away from a centralised model of provision towards more increasing demand at the same time as public expenditure tightens. The NHS personalised, devolved and cost-effective provision. The potential for more democratic models of public service governance and delivery 10.7m and social care will face an acute funding challenge. The education system will – beyond marketisation and new public management – will increase grapple with equipping people for the digital age. Childcare is likely to remain as technological and cultural change facilitate greater participation Number of people in the UK and voice for users and professionals alike. Amid the challenges, patchy and inadequate. The digitalisation of government will transform the expected to have inadequate then, there is an opportunity to create more democratic and effective retirement incomes, putting relationship between citizen and state. public services. significant pressure on care, housing and welfare
HEALTH AND SOCIAL CARE WILL FACE A FUNDING CRISIS
• Demographic change will increase demand. With revenue not expected to increase, this will create a Very significant gaps between expected demand and forecast funding funding gap. The projected health funding gap for the NHS is £9 billion in 2030/31. This is 5% of the are expected to emerge in health and social care. The gap is not projected total budget for that year. insurmountable, but will require significantly increasing expenditure and improving productivity if health and social care are not to deteriorate. • More worryingly, for adult social care the funding gap of £13 billion is equivalent to 62% of the total expected budget for 2030/31. On current trends, adult social care is unsustainable. Figure 1: Relative growth in projected spending pressures and budget for UK publicly funded health and adult social care • An ageing society will drive significantly increased spending on health, long-term social care, the state pension and other old-age benefits. The OBR suggests this could increase annual spending by almost 2.0 2.5% of GDP between 2019/20 and 2030.
EDUCATION WILL BECOME MORE PLURALISTIC AND DIGITAL 1.8
• The school system will become more diverse but its funding will remain relatively secure. The pivotal further
education system is likely to continue to suffer from underinvestment and a lack of political support. 1.6 • Higher education will come under significant pressure due to Brexit, but should remain a major strength of the UK. 1.4
COMPLETING THE REVOLUTION: DE-GENDERING CARE
• Childcare is likely to remain patchy and expensive. This will continue to be a barrier to gender equality 1.2 and equal life chances.
• This makes de-gendering childcare and social care through investment in universal public provision 1.0 and expanded shared parental leave pivotal to advancing equality and fairly meeting the pressures of demographic change.
0.8 2015 16 2016 17 2017 18 2018 19 2019 20 2020 21 2021 22 2022 23 2023 24 2024 25 2025 26 2026 27 2027 28 2028 29 2029 30 2030 31
Adult social care udget assuming falling spending pressures udget Adult social care spending pressures y 13 in real terms y 2019 20
Source: Roberts et al 2015
NEW HEALTHCARE PRESSURES obesity 2x 2m 80% One third (33%) of women and 36% of men are The number of people who will need daily physical By 2030 there will be an estimated 2 million additional Over 80% more people aged 65 and over with dementia forecast to be obese in 2030 assistance to wash, feed or clothe themselves will adults in the UK with mental health challenges. Ensuring in 2030 in England and Wales compared to 2010 double between 2010 and 2030 to 2 million parity with physical care will be vital
32 33 INEQUALITY UNLEASHED:
LIVING STANDARDS, INEQUALITY, POVERTY AND SOCIAL MOBILITY WILL WORSEN POVERTY AND WEALTH • Living standards will rise slowly for middle- and low-income households. Real disposable income is forecast to rise by just 9% in total by 2030 for the former and just 2% for the latter. Inequality will be unleashed in the 2020s. Technological change will strengthen • Inequality is expected to surge. The income of high-income households is forecast returns to capital while reducing labour power. The cost of living, especially to rise 11 times faster than the incomes of low-income households during the 2020s. housing, will rise faster than income for many. The fiscal direction of the UK will • Relative poverty is expected to rise sharply. Between 2015 and 2030 an extra accentuate trends towards inequality, with relative poverty rates rising and the 3.6 million people are forecast to fall into poverty, including 1.2 million children. working poor losing ground. Wealth inequalities, already high, will increase due • Wealth inequality, already high, is likely to surge. The richest 10% of households own 45% of the UK’s wealth, the poorest 50% only 8.7%. As returns to capital to technological, demographic and economic trends. increase relative to labour, wealth inequality will increase. As a result, living standards and life chances will divide by age, region, and class. Low- and middle-income households will experience a ‘lost decade’ as richer households pull away. Restoring broadly shared prosperity The poorest half of the population have barely benefitted from economic growth in will be a key challenge for politics and policymakers. If they fail to do so, the 2020s could mark the start of a recent decades. 70% of the UK’s population had flat or declining income over the new gilded age. last decade, while 6million low-income families are worse off than 10 years ago. Figure 1: Share of the growth in real original incomes between 1979 and 2012 (%), by income decile INEQUALITY WILL BE TURBOCHARGED BY CHANGES IN TECHNOLOGY, WORK, WEALTH AND WELFARE 40 35 • Technological change risks turbocharging inequality. Unchecked, technological change risks creating a new form of economic feudalism, with capital’s share getting larger and larger at the expense of labour, 30 while labour’s smaller share will be less equally divided. 25 • Welfare reform will likely increase inequalities in living standards. Working-age adult payments will be 20 9% below pre-crisis levels by 2020, and those to children down 12% but pensioner payments up 19%. 15 • Sluggish wage growth and rising living costs, particularly housing, will cause slow 10 income growth for many. 5
0
5 The UK economic model is unlikely to deliver 1 2 3 4 5 6 7 8 9 10 broadly shared prosperity. Nine of the 10 hare of growth Perfectly e ual growth poorest regions in western Europe are in the UK, but we also have the richest region 7 Source: Jacobs et al 2016
8 A combination of rising housing costs, slow income growth, and a less supportive welfare system mean for many the 2020s is set to be another decade of stagnation 3 in living standards on current trends. 7 10 RICHEST 5 Figure 2: Projections for weekly earnings in 2030 (2014 prices) 6 4 1 Inner ondon UK 1 6 1 400 2 uxem ourg uxem ourg 4 3 Brussels Belgium 1 1 200 4 am urg ermany 2 5 Ile de France France 3 1 000 6 roningen etherlands 9 7 tockholm weden 10 800 8 2 O er ayern ermany 5 9 ienna Austria 600 10 armstadt ermany 8 400 9 POOREST 200 1 est ales UK 2 Cornwall UK 0 3 urham and Tees alley UK 10th 25th edian 75th 90th ean 4 incolnshire UK percentile percentile percentile percentile 5 outh orkshire UK 2015 2030 6 hropshire and taffordshire UK Source: Harrop and Reed 2015 7 ancashire UK 8 orthern Ireland UK 9 ainaut Belgium 10 East orkshire orth Source: Sources: incolnshire UK Inequality Briefing 2014 Harrop and Reed 2015; Cortlett et al 2015; ONS 2015a; Dobbs et al 2016
34 35 INTERGENERATIONAL STRAIN
NO LABOUR MARKET FOR YOUNG (WO)MEN Sharp and growing intergenerational differences over housing, income and work The most recent cohort entering the labour market are will be key a feature of the 2020s. Younger generations are expected to be at earning significantly less than their predecessors. This the sharp end of a less secure labour market and the housing crisis. By contrast, is likely to have a scarring effect: younger cohorts will 70% struggle to catch up with older, better paid generations. as owner-occupier status increases among older cohorts, many pensioners will The percentage of It could also set a precedent: the generation entering become ‘ordinarily’ wealthy. Politically, this could sharpen the demand for a more 25–34-year-olds living in the work in the 2020s could start at a historically low rate private rental sector is due to relative to postwar cohorts. active state in redressing housing concerns, while also increasing the political increase from roughly 20% in Figure 1: Median pay by age for each generation: UK, importance of policies around the fair distribution of wealth, assets, benefits 2003 to nearly 70% in the 1975–2016, median real weekly pay for all employees 2020s and pensions. (RPIJ-adjusted to 2016 prices) 600 THE GAME OF LIFE 500
400
300
200
100
0 16 20 24 28 32 36 40 44 48 52 56 60 64 68
reatest gen 1911 1925 ilent gen 1926 1945 Ba y oomers 1946 1965 en 1966 1980 illennials 1981 2000 Source: Gardiner 2016
NOWHERE TO CALL HOME The 2020s will see a transformation in housing tenure. Private sector renting will surge among the young, often in substandard conditions. By 2030, almost 40% of all under-40s are forecast to be living back at home with their parents, up from around 14% today. Homeownership will decline overall as rising prices put it out of reach for many.
Figure 2: Homeownership rates by age for each generation: UK, 1961–2016 80 70 60 50 40 30 20 MILLENIALS GENERATION X BABY BOOMERS OLDER PENSIONERS 10 0 Forecast to be the first postwar A typical member of Winners in the housing boom: since Pensioners now earn more after 22 26 30 34 38 42 46 50 54 58 62 66 70 generation to have lower total generation X working 1969, house prices for first-time housing costs than those in work Forgotten gen 1896 1910 reatest gen 1911 1925 lifetime earnings than their throughout her 20s will have buyers have increased 48 times – whereas in 1990 they were predecessors. earned £8,000 more than a over, while incomes have grown 30% poorer. ilent gen 1926 1945 Ba y oomers 1946 1965 typical millennial, and is far 29 times. en 1966 1980 illennials 1981 2000 more likely to own her home. Source: Gardiner 2016
Sources: Shelter 2015a; Shelter 2015b; Gardiner 2016; Belfield et al 2015.
36 37 A NEW ‘SOCIAL’-ISM?: A NETWORKED, DATA RICH WORLD DATA UBIQUITY AND THE POLITICS OF THE NETWORK WILL TRANSFORM CITIES, BUSINESSES AND PUBLIC SERVICES The future will be networked. Ubiquitous digital connection and the capture and analysis of ever-more data • The ever increasing ubiquity of real time will transform our built environment, create new models of governance, and disrupt and reshape business data could have transformative effects models and sectors. In the process, the ‘whole of society will have become a single office and a single factory’, on the allocation of goods, services and broader social resources in coming generating immense economic value and power. decades. Who reaps the benefit of a networked society will be a key political question. If data is a key resource of the future, and it is socially produced, a new ‘social’-ism could • Ubiquitous data could help overcome be possible in the 2020s, through democratic ownership of our collective data. As Stafford Beer, designer of the visionary cybernetic system Project Cybersyn, said, Friedrich Hayek’s famous ‘socialist ‘information is a national resource’. Moreover, a world of ubiquitous real-time data could help create fundamentally different models of production and distribution. calculation’ critique of planning Building a democratic and open data infrastructure is therefore a challenge for progressives akin to delivering the physical infrastructure of the 19th century and the systems, opening up a 21st century welfare state of the 20th. built along fundamentally different models of production and distribution DATA WILL BECOME INCREASINGLY UBIQUITOUS, VALUABLE AND ENCLOSED • Digital networked technologies will facilitate the widespread adoption of • Physical and social infrastructure will be increasingly digital and networked, FIgure 1: The data economy will create immense value. decentralized energy production and capturing data and generating immense economic value. The ‘Internet of Things’ The ‘Internet of Things’ is expected to add up to $303 billion consumption. alone has a total potential global impact of $11.1 trillion a year by 2025. in real terms to the UK economy alone by 2030. • Improved data and analysis will help • Who captures the economic windfall from socially generated data will be a key 600 n reframe transport systems and vehicle political question. Currently, networks effects means the data economy is likely to 500 n technology, radically altering built be marked by oligopolistic consolidation and cartelisation. environments, transport, and logistics 400 n • The enclosure of socially created data by extractive network monopolies is • Digitally networked, data rich cities will analogous to the enclosure of the commons in the 19th century. If so, how we do 300 n transform how we interact with the built we build an open, democratic data infrastructure? 200 n environment, offering more effective management of scarce resources, and FACEBOOK, THE NEW SOCIAL FACTORY? FROM COMMAND TO CONTROL 100 n improving urban transport, energy, social policy and healthy systems. • Production will evolve from physical labour to immaterial, knowledge-based labour, 0 n with more and more people performing unremunerated data-generating labour. 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 This will generate a new type of network capitalism that relies on public data and powerful network effects, and tends towards monopoly. lloT P impact current conditions • The boundaries between work and leisure will increasingly blur as the ‘whole of lloT P impact additional measures society will have become a single office and a single factory’. Who benefits Source: Davarzani and Purdy 2015 from this will be determined by the institutions and models of ownership we can collectively develop: how is the data infrastructure built, who controls it, and who owns the data produced? • Economic and political power will become less about command and more about control. The ubiquity of sensors networks will allow for powerful forms of surveillance, control, ‘apolitical’ evaluation and measurement as models of governance. This will raise vital questions around the ownership and control of these technologies, and about what we should measure.
Sources: Manyika et al 2015; Srnicek and Williams 2015; Lenin 1917, Intel 2016; UK Government Office for Science 2016; Hardt and Negri 2004
38 39 A DECADE OF DEMOCRATIC DISTRESS
Brexit will reshape a democracy already divided by age, class and region. Deep shifts in politics and culture will continue to overturn old certainties as group ties and identities structure political commitment and attitudes. Fragmentation and constitutional upheaval are likely to accelerate as Westminster’s institutions By significant majorities, individuals struggle to reflect the fluidity of 21st century politics and identity. in occupation classes C2 (-18) and DE (-38) think Signs of democratic distress will multiply, straining the legitimacy and effectiveness of the UK’s political that democracy serves their institutions. A mood of anxiety, insecurity and declining trust in public institutions is set to be the backdrop. interests poorly. Without Divides over migration and the management of globalisation will be continue to be a revitalisation, democratic critical dividing line in a post-EU Britain. The politics of place – from neighbourhood norms will continue to be to nation – are likely to rise in salience after Brexit. At the same time, substantive challenged in the 2020s. devolution to the cities and regions of the UK is set to continue, offering an avenue for democratic renewal, particularly when combined with the democratic energy technological change can unleash. Politically, a complex mix of liberal, solidaristic and conservative impulses will shape the decade, with regional and sectoral interests clashing over the terrain of Brexit.
THE END OF ‘BRITISH POLITICS’: A DEMOCRACY DIVIDED BY AGE, REGION AND CLASS • The UK’s first-past-the-post electoral system will struggle to represent an increasingly diverse political landscape. The idea of a unitary ‘British’ electoral map is going to become redundant on current trends given the decline of unionist parties in Scotland. • The average voter in the 2020s is likely to be older, richer and more likely to be an owner-occupier than the population as a whole. Politics will tilt towards their DEVOLUTION AS A ROUTE TO interests as a result. DEMOCRATIC RENEWAL? • Attitudes to migration and the management • The next decade will see extensive devolution of globalisation are sharply divided by to the cities and regions of the UK. Political age, class and region. This will continue to power and decision-making will become more shape politics and divide traditional political diverse, yet devolution will remain patchy coalitions, particularly on the left. and incomplete.
• Cities, not Westminster, are likely to be where political experimentation takes place in the 2020s.
• The politics of place and identity, whether neighbourhood, city, region, or nation, are therefore likely to rise in political importance, fragmenting politics but also offering routes to democratic renewal.
• Political divergence will drive further devolution to Scotland – or potentially even independence. The political aftershocks of Brexit could outlast the economic effects.
41 REFERENCES Achen C and Bartels L (2016) Democracy for Realists: Why Elections Do Not Produce Responsive Government, Princeton University Press Arntz M, Gregory T and Zierahn U (2016) ‘The Risk of Automation for Jobs in OECD Countries: A Comparative Analysis’, OECD social, employment and migration working papers no. 189, Organisation for Economic Co-operation and Development. http://www.oecd-ilibrary.org/social- issues-migration-health/the-risk-of-automation-for-jobs-in-oecd-countries_5jlz9h56dvq7-en Bank of England (2016) Inflation Report: August 2016. http://www.bankofengland.co.uk/publications/ CONCLUSION Documents/inflationreport/2016/aug.pdf ‘We are called to be architects of the future, not its victims.’ Belfield C, Cribb J, Hood A and Joyce R (2015)Living Standards, Poverty and Inequality in the UK: R Buckminster Fuller 2015, Institute for Fiscal Studies. https://www.ifs.org.uk/uploads/publications/comms/R107.pdf Berg A, Buffie E and Zanna L (2016) ‘Robots, Growth, and Inequality’,Finance & Development 53: 3. In a world increasingly transformed, the status quo will prove http://www.imf.org/external/pubs/ft/fandd/2016/09/berg.htm inadequate. The UK’s current economic model is likely to deliver Bessis H (2016) Competing with the Continent: How UK cities compare with their counterparts, Centre for Cities. http://www.centreforcities.org/wp-content/uploads/2016/09/16-09-21-Competing- weak and unstable growth, rising inequality and stagnant living with-the-continent.pdf standards for many. Without reform, our political and fiscal Brynjolfsson E and McAfee A (2014) The Second Machine Age: Work, Progress, and Prosperity in a system will struggle to build a more democratic, healthy society Time of Brilliant Technologies, W. W. Norton & Company. Bughin J, Chironga M, Desvaux G, Ermias T, Jacobson P, Kassiri O, Leke A, Lund S, van Wamelen in the decades ahead, even as Brexit accelerates us towards a A, and Zouaoui Y (2016) Realising the potential of Africa’s economies, McKinsey Global Institute, radically different institutional landscape. http://www.mckinsey.com/global-themes/middle-east-and-africa/realizing-the-potential-of-africas- economies In the conditions of the 2020s and beyond, politics cannot return to the strategies of the Bush O, Knott S, and Peacock C (2014) Why is the UK banking system so big and is that a problem?, past. The old approaches will not be robust enough to mitigate against growing insecurity, Bank of England, http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/ ambitious enough to reform Britain’s economic model, or sufficiently innovative to affect qb14q402.pdf deeper social and political transformation. The old toolkit can only get us so far in the new Cambridge Economics (2014) The economics of climate change policy in the UK: An analysis times ahead. of the impact of low-carbon policies on households, businesses and the macro-economy, http://www.camecon.com/Libraries/Downloadable_Files/WWF_Final_Report_1.sflb.ashx Instead, the radical disruption of the coming decades should be met with new institutional solutions if we are to flourish collectively and as individuals. This will require rethinking Charlesworth A, Gershlick B, Roberts A, Stirling A and Thompson S (2015) Filling the gap: notions of work, value and how they connect to identity and culture, as well as reimagining Tax and fiscal options for a sustainable UK health and social care system, Health Foundation. the institutions underpinning ownership, production, consumption and distribution. Above http://www.health.org.uk/sites/health/files/FillingTheGap_1.pdf all, it will require the re-embedding of economic policy within political objectives, shaping Clarke S and Whittaker M (2016) The Importance of Place: explaining the characteristics the economy through democratic institutions and practices. IPPR’s newly launched underpinning the Brexit vote across different parts of the UK, Resolution Foundation. Commission on Economic Justice will seek to give practical expression to that impulse, http://www.resolutionfoundation.org/publications/the-important-of-place-explaining-the- developing new approaches and policies to ensure that we build an economy that works characteristics-underpinning-the-brexit-vote-across-different-parts-of-the-uk/ for all of us. Climate Change Committee (2015) The fifth carbon budget – The next step towards a low-carbon economy. https://www.theccc.org.uk/publication/the-fifth-carbon-budget-the-next-step-towards-a- The goal of reform in the decade-and-a-half ahead should be to recommence what low-carbon-economy/ Raymond Williams called ‘the long revolution’ – the steady, irreversible expansion of democratic voice and power through building or reforming institutions of society, market Colebrook C, Jacobs M and Stirling S (2016) Out of shape: Taking the pulse of the UK economy, and state in pursuit of a more equal, prosperous and powerful society (Williams 1961). IPPR. http://www.ippr.org/publications/out-of-shape This would respond to the sentiments widely expressed in the EU referendum, that society Cortlett A (2016) Examining an elephant: globalisation and the lower middle class of the rich world, should democratically order the market: that it should be the servant, not the master. Resolution Foundation, http://www.resolutionfoundation.org/publications/examining-an-elephant- globalisation-and-the-lower-middle-class-of-the-rich-world/ It will require building a new ‘common sense’ that reclaims a different type of modernity to that envisioned by neoliberalism – one that deepens and broadens economic and social Cortlett A, Finch, D and Whittaker M (2016) Living Standards 2016 The experiences of low to middle income households in downturn and recovery, Resolution Foundation. freedom for everyone, not just a privileged few. This will require collectively shaping social, http://www.resolutionfoundation.org/wp-content/uploads/2016/02/Audit-2016.pdf economic and technological change to extend democracy and deepen human flourishing, creating institutions that harness the growing power of technology to promote shared Cortlett A, Finch, D and Whittaker M (2015) Shape shifting: the changing composition of the state abundance, and building a common life that rewards purpose and kindness. during fiscal consolidation, Resolution Foundation. http://www.resolutionfoundation.org/wp-content/ uploads/2015/11/Size-and-shape-slides-FINALonline.pdf In short, we will need to be the architects of a better future, not archivists preserving Davarzani L and Purdy M (2015) The Growth Game-Changer: How the Industrial Internet of Things an old order. can drive progress and prosperity, Accenture. https://www.accenture.com/_acnmedia/Accenture/ Conversion-Assets/DotCom/Documents/Global/PDF/Dualpub_18/Accenture-Industrial-Internet- Things-Growth-Game-Changer.pdf Delong B (2015) ‘What would “peak human” look like?’, World Economic Forum. https://www.weforum.org/agenda/2015/09/what-would-peak-human-look-like/?utm_ content=buffer81c84&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
42 Department of Business, Innovation, and Skills (BIS) (2016) Trade union membership 2015: Statistical Gardiner L (2016) Stagnation Generation: the case for renewing the intergenerational contract, bulletin. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/525938/ Resolution Foundation. http://www.resolutionfoundation.org/publications/stagnation-generation- Trade_Union_Membership_2015_-_Statistical_Bulletin.pdf the-case-for-renewing-the-intergenerational-contract/ Department of Energy and Climate Change (2015) ‘Updated energy and emissions projections: 2015’, Institute for Fiscal Studies (2016) Brexit and the UK’s public finances. https://www.ifs.org.uk/ spreadsheet. publications/8296 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/483925/Annex-b- Imperial College Centre for Energy Policy and Technology (2015) Energy system crossroads - time for carbon-dioxide-emissions-by-source_03-DEC-2015.xls decisions. UK 2030 low carbon scenarios and pathways - key decision points for a decarbonised energy system. https://workspace.imperial.ac.uk/icept/Public/Energy%20System%20Crossroads.pdf Department of Energy and Climate Change (2012) ‘DECC Updated Energy & Emissions Projections - October 2012’, spreadsheet. https://www.gov.uk/government/uploads/system/uploads/attachment_ Inequality Briefing (2014) ‘Briefing 43: The poorest regions of the UK are the poorest in North West data/file/65721/6668-annex-e-total-electricity-gen-by-source.xls Europe’. http://inequalitybriefing.org/brief/briefing-43-the-poorest-regions-of-the-uk-are-the-poorest- in-northern- Dhingra S, Ottaviano G, Sampson T, and van Reenen J (2016) ‘The Consequences of Brexit for UK Trade and Living Standards’, Centre for Economic Performance. http://cep.lse.ac.uk/pubs/download/ Intel (2016) ‘A guide to the Internet of Things’, poster. http://www.intel.co.uk/content/dam/www/ brexit02.pdf public/emea/xe/en/images/iot/guide-to-iot-infographic.png Dobbs R, Madgavkar A, Manyika J, Woetzel J, Bughin J, Labaye E, and Kashyap P (2016) Kelly B (2016) ‘How the UK government makes the business case’, slidepack, presented at Poorer than their parents? A new perspective on income inequality, McKinsey Global Institute. HartmenEVENT 2016: Making the business case, Utrecht, 7 October 2016. http://www.hartmanevent. http://www.mckinsey.com/global-themes/employment-and-growth/poorer-than-their-parents-a- nl/l/library/download/urn:uuid:e505e041-ed6a-4dd8-817f-c30b7a58ac67/how+the+uk+government+ new-perspective-on-income-inequality makes+the+business+case+(hartmanevent+16)+.pdf?format=save_to_disk&ext=.pdf. Dobbs R, Manyika J, and Woetzel J (2015) The four global forces breaking all the trends, McKinsey Lawrence M (2015) The democracy commission: Reforming democracy to combat political inequality, Global Institute. http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our- IPPR. http://www.ippr.org/publications/the-democracy-commission-reforming-democracy-to- insights/the-four-global-forces-breaking-all-the-trends combat-political-inequality Dobbs R, Lund S, Woetzel J, and Mutafchieva M (2015) Debt (and not much) deleveraging, McKinsey Lenin V (1917) The State and Revolution. https://www.marxists.org/archive/lenin/works/1917/ Global Institute. http://www.mckinsey.com/global-themes/employment-and-growth/debt-and-not- staterev/ch05.htm much-deleveraging Lewis S and Maslin M (2015) ‘Defining the Anthropocene’,Nature 519: 171–180. http://www.nature.com/ Dobbs R, Remes J, Manyika J, Roxburgh C, Smit S and Schaer F (2012) Urban world: Cities and the nature/journal/v519/n7542/full/nature14258.html rise of the consuming class, McKinsey Global Institute. http://www.mckinsey.com/global-themes/ Manyika J, Lund S, Bughin J, Robinson K, Mischke J, and Mahajan D (2016) Independent work: urbanization/urban-world-cities-and-the-rise-of-the-consuming-class Choice, necessity, and the gig economy, McKinsey Global Institute. http://www.mckinsey.com/ Economist Intelligence Unit (2015) ‘Long-term macroeconomic forecasts: Key trends to 2050’. global-themes/employment-and-growth/independent-work-choice-necessity-and-the-gig-economy http://pages.eiu.com/rs/783-XMC-194/images/Long-termMacroeconomicForecasts_KeyTrends.pdf Manyika J, Woetzel J, Dobbs R, Remes J, Labaye E, and Jordan A (2015) Can long-term global Ekins P and NcGlade C (2015) ‘The geographical distribution of fossil fuels unused when limiting growth be saved?, McKinsey Global Institute. http://www.mckinsey.com/global-themes/employment- global warming to 2 C’, Nature 517: 187–190. http://www.nature.com/nature/journal/v517/n7533/full/ and-growth/can-long-term-global-growth-be-saved nature14016.html Manyika J, Chui M, Bisson P, Woetzel J, Dobbs R, Bughin J, and Aharon D (2015) Unlocking the European Strategy and Policy Analysis System (ESPAS) (2016) Shaping the Future - Thoughts on the potential of the Internet of Things, McKinsey Global Institute. http://www.mckinsey.com/business- Future of Society and Governance, http://espas.eu/orbis/document/shaping-future-thoughts-future- functions/business-technology/our-insights/the-internet-of-things-the-value-of-digitizing-the- society-and-governance physical-world Eurostat (2016) ‘Population (demography, migration and projections)’, dataset. http://ec.europa.eu/ Manyika J, Chui M, Bughin J, Dobbs R, Bisson P, and Marrs A (2013) Disruptive technologies: eurostat/web/population-demography-migration-projections/population-projections-data advances that will transform life, business, and the global economy, McKinsey Global Institute. http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/disruptive-technologies EY (2015) Megatrends 2015: Making sense of a world in motion, http://www.ey.com/Publication/ vwLUAssets/ey-megatrends-report-2015/$FILE/ey-megatrends-report-2015.pdf Mental Health Network, NHS Confederation (2016) ‘Key facts and trends in mental health 2016 update’. http://www.nhsconfed.org/~/media/Confederation/Files/Publications/Documents/MHN%20 Ford M (2015) The Rise of the Robots: Technology and the Threat of a Jobless Future, Basic Books. key%20facts%20and%20trends%20factsheet_Fs1356_3_WEB.pdf Frey C and Osborne M (2013) ‘The Future of Employment: How Susceptible Are Jobs to O’Connor S (2016) ‘When your boss is an algorithm’, Financial Times, 8 September 2016. Computerisation?’, Oxford Martin School, University of Oxford. http://www.oxfordmartin.ox.ac.uk/ https://www.ft.com/content/88fdc58e-754f-11e6-b60a-de4532d5ea35 downloads/academic/The_Future_of_Employment.pdf Office for Budget Responsibility [OBR] (2015)Fiscal Sustainability Report: June 2015. Frey C and Osborne M (2015) From brawn to brains: the impact of technology on jobs in the UK, http://budgetresponsibility.org.uk/docs/dlm_uploads/49753_OBR-Fiscal-Report-Web- Deloitte. https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/Growth/deloitte-uk- Accessible.pdf insights-from-brawns-to-brain.pdf Office for Budget Responsibility [OBR] (2016)Economic and Fiscal Outlook – November 2016. Foreshew-Cain S (2016) ‘What government might look like in 2030’, Government Digital Service blog, http://cdn.budgetresponsibility.org.uk/ExecSummNov2016EFO.pdf 11 May 2016. https://gds.blog.gov.uk/2016/05/11/what-government-might-look-like-in-2030/ Office for National Statistics [ONS] (2015a)Wealth and Assets Survey: July 2012 to June 2014. Griffith P and Halej J (2015)Trajectory and transience: Understanding and addressing the pressures http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/ons/ of migration on communities, IPPR. http://www.ippr.org/publications/trajectory-and-transience- dcp171776_428683.pdf understanding-and-addressing-the-pressures-of-migration-on-communities Office for National Statistics [ONS] (2015b)National Population Projections: 2014-based Statistical Haldane A (2015) ‘Labour’s share’, speech delivered at the Trades Union Congress, London, 12 Bulletin. http://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/ November 2015. http://www.bankofengland.co.uk/publications/Pages/speeches/2015/864.aspx populationprojections/bulletins/nationalpopulationprojections/2015-10-29#2014-based-principal- Hardt M and Negri A (2004) Multitude: War and Democracy in the Age of Empire, Penguin Press population-projections Harrop A and Reed H (2015) Inequality 2030, Fabian Society. http://www.fabians.org.uk/wp-content/ Organisation for Economic Co-operation and Development [OECD] (2012) ‘Looking to 2060: Long- uploads/2015/02/Inequality2030.pdf term global growth prospects’, OECD economics department policy papers no. 3. https://www.oecd. org/eco/outlook/2060%20policy%20paper%20FINAL.pdf Hatfield I (2017 forthcoming)Skills 2030, IPPR. Organisation for Economic Co-operation and Development [OECD] (2014) ‘Shifting Gear: Varoufakis Y (2016) ‘Capitalism will eat democracy – unless we speak up’, transcript of TED talk Policy Challenges for the next 50 Years’, OECD economics department policy notes no. 24. delivered December 2015. https://www.ted.com/talks/yanis_varoufakis_capitalism_will_eat_ https://www.oecd.org/eco/growth/Shifting%20gear.pdf democracy_unless_we_speak_up/transcript?language=en Organisation for Economic Co-operation and Development [OECD] (2015) ‘The Future of Weldon D (2016) ‘Negative yields, the euthanasia of the rentier & political economy’. Productivity’. http://www.oecd.org/eco/growth/the-future-of-productivity-book.pdf https://medium.com/@DuncanWeldon/negative-yields-the-euthanasia-of-the-rentier- political-economy-dc3131d8d85e#.e5jp5bhzh Oxford Economics (2015) Future trends and market opportunities in the world’s largest 750 cities How the global urban landscape will look in 2030. https://www.oxfordeconomics.com/Media/ World Economic Forum (2016a) The Global Gender Gap Report 2016. https://www.weforum.org/ Default/landing-pages/cities/OE-cities-summary.pdf?submissionGuid=e037698a-f4ce-4125-9969- reports/the-global-gender-gap-report-2016 31519248bde9 World Economic Forum (2016b) World Economic Forum White Paper Digital Transformation PwC (2011) Future of World Trade: Top 25 sea and air freight routes in 2030. https://www.pwc.de/de/ of Industries: In collaboration with Accenture Consumer Industries. http://reports.weforum. transport-und-logistik/assets/future_of_world_trade-final_160311.pdf org/digital-transformation-of-industries/wp-content/blogs.dir/94/mp/files/pages/files/wef-dti- consumerindustrieswhitepaper-final-january-2016.pdf PwC (2015) The World in 2050. Will the shift in global economic power continue?. https://www.pwc.com/ gx/en/issues/the-economy/assets/world-in-2050-february-2015.pdf World Economic Forum (2015) Deep Shift: Technology Tipping Points and Societal Impact. http://www3.weforum.org/docs/WEF_GAC15_Technological_Tipping_Points_report_2015.pdf PwC (2016) Leaving the EU: Implications for the UK economy. http://www.pwc.co.uk/economic- services/assets/leaving-the-eu-Implications-for-the-uk-economy.pdf World Health Organisation (2015) ‘Proportion of overweight and obese males and females to increase in most European countries by 2030, say latest projections by WHO’, press Purdy J (2015) After Nature: A Politics for the Anthropocene, Harvard Press. release, 6 May 2015. http://nhfshare.heartforum.org.uk/RMAssets/NHFMediaReleases/2015/ Rachel L and Smith D (2015) ‘Secular drivers of the global real interest rate’, Bank of England, Staff ECO2015WEDSPRESSWHO4.pdf Working Paper No. 571. http://www.bankofengland.co.uk/research/Documents/workingpapers/2015/ World Trade Organisation (2014) World Trade Report 2014 Trade and development: recent trends and swp571.pdf the role of the WTO. https://www.wto.org/english/res_e/booksp_e/world_trade_report14_e.pdf Rajeswaran S and Sunak R (2014) A Portrait of Modern Britain, Policy Exchange. http://www.policyexchange.org.uk/images/publications/a%20portrait%20of%20 modern%20britain.pdf ACKNOWLEDGMENTS Richards B (2016) ‘Net migration, unemployment and job vacancies What will increasing unemployment and falling job vacancies mean for net migration by 2020?’, Social Market The author would like to thank Steve Morrison, Len Collinson, and Trevor Chinn for their Foundation. http://www.smf.co.uk/wp-content/uploads/2016/07/SMF-Net-migration-report.pdf generous support of the project. Roberts A, Thompson S, Charlesworth A, Gershlick B and Stirling A (2015) Filling the gap: He would also like to thank colleagues at IPPR – both past and present - for their Tax and fiscal options for a sustainable UK health and social care system, Health Foundation. comments and advice, particularly Tom Kibasi, Michael Jacobs, Carys Roberts, http://www.health.org.uk/sites/health/files/FillingTheGap_1.pdf Alfie Stirling, Joss Garman, Sofie Jenkinson, Nick Pearce, and Laurie Laybourn-Langton. Select Committee on Public Service and Demographic Change, House of Lords (2013) Ready for Finally, he would ike to thank Elizabeth Mellor and Ross Fulton for bringing the report to Ageing? Annex 9: Increasing demand for health and social care. http://www.publications.parliament. visual life, and Adebusuyi Adeyemi, Alvin Carpio, Ellie Groves, Joe Jervis, Sophia Morrell, uk/pa/ld201213/ldselect/ldpublic/140/14012.htm Oliver MacArthur and Jessica Toale for their contribution. Shelter (2015a) Tenure Projections: 25 to 34 year olds in England. https://england.shelter.org.uk/__ The future remains ours to make; I hope this report helps in a small way for us to make data/assets/pdf_file/0007/1138984/2015_05_19_Tenure_projections_-_25-34_year_olds.pdf that future well. Shelter (2015b) Housing affordability for first time buyers. http://england.shelter.org.uk/__data/assets/ pdf_file/0004/1076926/2015_02_26_Affordability_for_first_time_buyers_-_FINAL.pdf Srnicek N and Williams A (2015) Inventing the Future: Postcapitalism and a World Without Work, Verso Summers L (2015) ‘Reflections on Secular Stagnation’, keynote address at Princeton University’s Julius-Rabinowitz Center for Public Policy and Finance, 19 February 2015. http://larrysummers. com/2015/02/25/reflections-on-secular-stagnation/ ABOUT IPPR Susskind D and Susskind R (2015) The future of the professions: How technology will transform the work of human experts, Oxford University Press IPPR, the Institute for Public Policy Research, is the UK’s leading progressive thinktank. We are an independent charitable organisation Turner A (2014) Between Debt and the Devil: Money, Credit, and Fixing Global Finance, Princeton with more than 40 staff members, paid interns and visiting fellows. University Press Our main office is in London, with IPPR North, IPPR’s dedicated thinktank for the North of England, operating out of offices in Transport for the North (2016) Northern Powerhouse Independent Economic Review. Manchester and Newcastle, and IPPR Scotland, our dedicated http://www.transportforthenorth.com/Reports-and-Information.html thinktank for Scotland, based in Edinburgh. UK Commission for Skills and Jobs (2014) The future of work: jobs and skills in 2030. Our purpose is to conduct and promote research into, and the https://www.gov.uk/government/publications/jobs-and-skills-in-2030 education of the public in, the economic, social and political sciences, science and technology, the voluntary sector and social UK Government (2013) The Smart City Market: Opportunities for the UK. https://www.gov.uk/ enterprise, public services, and industry and commerce. government/uploads/system/uploads/attachment_data/file/249423/bis-13-1217-smart-city-market- opportunties-uk.pdf IPPR 4th Floor UK Government (2014) Space Innovation and Growth Strategy 2014-2030 Space Growth Action Plan. 14 Buckingham Street https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/298362/igs-action-plan.pdf London WC2N 6DF T: +44 (0)20 7470 6100 UK Government Office for Science (2014) The Internet of Things: making the most of the Second E: [email protected] Digital Revolution. https://www.gov.uk/government/uploads/system/uploads/attachment_data/ www.ippr.org file/409774/14-1230-internet-of-things-review.pdf Registered charity no: 800065 (England and Wales), SC046557 (Scotland). United Nations [UN] (2015) World Ageing Report. http://www.un.org/en/development/desa/ This paper was first published in December 2016. © 2016 population/publications/pdf/ageing/WPA2015_Report.pdf The contents and opinions in this paper are the author’ s only. NEW IDEAS for CHANGE
Institute for Public Policy Research